Tuesday, December 3, 2013
Today the Supreme Court issued a unanimous decision in Atlantic Marine Constr. Co. v. United States Dist. Court for Western Dist. of Tex. (No. 12-929), which considers the proper procedural vehicle for enforcing a contractual forum-selection clause when the plaintiff files in a federal district that violates that clause. A few highlights from the opinion by Justice Alito:
- Motions under Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a) are not appropriate in this situation. A forum-selection clause does not make a venue “improper” for purposes of Rule 12(b)(3) or “wrong” for purposes of § 1406(a). [See pp. 4-8]
- A motion to transfer under 28 U.S.C. § 1404(a) is appropriate in this situation. Section 1404(a) “provides a mechanism for enforcement of forum-selection clauses that point to a particular federal district.” [p.9]
- “[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens.” [pp.9-10]
- It remains an open question whether a forum-selection clause could be enforced through other vehicles, such as a Rule 12(b)(6) motion. This possibility had been urged by Professor Stephen Sachs in amicus brief, but the Court did not address it because the parties themselves did not raise it. Justice Alito adds: “Even if a defendant could use Rule 12(b)(6) to enforce a forum-selection clause, that would not change our conclusions that § 1406(a) and Rule 12(b)(3) are not proper mechanisms to enforce a forum-selection clause and that §1404(a) and the forum non conveniens doctrine provide appropriate enforcement mechanisms.” [p.11]
The opinion then addresses how a court should decide a § 1404(a) motion to enforce a forum-selection clause. Justice Alito writes:
“When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.5 Only under extraordinary circumstances unrelated to the convenience of the parties should a §1404(a) motion be denied.” [p.11]
(Footnote 5 makes clear that the Court’s analysis “presupposes a contractually valid forum-selection clause,” which leaves open the possibility that such a clause could be challenged as contractually invalid.) Justice Alito then explains: “The presence of a valid forum-selection clause requires district courts to adjust their usual §1404(a) analysis in three ways.” [p.12] They are:
- “First, the plaintiff ’s choice of forum merits no weight. Rather, as the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted.” [p.13]
- “Second, a court evaluating a defendant’s § 1404(a) motion to transfer based on a forum-selection clause should not consider arguments about the parties’ private interests…. As a consequence, a district court may consider arguments about public-interest factors only.” [pp.13-14]
- “Third, when a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue’s choice-of-law rules.” [p.14]
Footnote 8 states that “the same standards should apply to should apply to motions to dismiss for forum non conveniens in cases involving valid forum-selection clauses pointing to state or foreign forums.”
The Court ultimately reverses the Fifth Circuit, but it remands for further proceedings: “Although no public-interest factors that might support the denial of Atlantic Marine’s motion to transfer are apparent on the record before us, we remand the case for the courts below to decide that question.” [p.17]
Monday, November 18, 2013
Earlier this month we covered Chief Justice Roberts’ statement in Marek v. Lane, a case challenging a class action settlement that included cy pres remedies. In his statement, Chief Justice Roberts agreed with the decision to deny certiorari but raised a number of concerns about cy pres remedies, concluding that “[i]n a suitable case, this Court may need to clarify the limits on the use of such remedies.”
Today, Justice Alito issued a similar statement “respecting the denial of the petition for writ of certiorari” in another case involving a class action settlement: Martin v. Blessing (No. 13-169). You can find his six-page statement in today’s order list, beginning on page 13 of the pdf file. It begins:
The petition in this case challenges a highly unusual practice followed by one District Court Judge in assessing the adequacy of counsel in class actions. This judge insists that class counsel “ensure that the lawyers staffed on the case fairly reflect the class composition in terms of relevant race and gender metrics.” App. to Pet. for Cert. 35a. The uniqueness of this practice weighs against review by this Court, but the meaning of the Court’s denial of the petition should not be misunderstood.
The judge is U.S. District Judge Harold Baer of the Southern District of New York, and Justice Alito writes that “[b]ased on the materials now before us, I am hard-pressed to see any ground on which Judge Baer’s practice can be defended.” [p.3]
Friday, November 15, 2013
1. Whether this Court should overrule or substantially modify the holding of Basic Inc. v. Levinson, 485 U.S. 224 (1988), to the extent that it recognizes a presumption of classwide reliance derived from the fraud-on-the-market theory.
2. Whether, in a case where the plaintiff invokes the presumption of reliance to seek class certification, the defendant may rebut the presumption and prevent class certification by introducing evidence that the alleged misrepresentations did not distort the market price of its stock.
Links to the cert-stage briefing and the Fifth Circuit’s opinion below available are at SCOTUSblog. If the name of this case sounds familiar, it’s been up to the Supreme Court before. In 2011, the Court unanimously decided that the plaintiff was not required to prove loss causation at the class-certification phase. But at the end of the opinion, Chief Justice Roberts alluded to the issues the Court will now confront:
Because we conclude the Court of Appeals erred by requiring EPJ Fund to prove loss causation at the certification stage, we need not, and do not, address any other question about Basic, its presumption, or how and when it may be rebutted. To the extent Halliburton has preserved any further arguments against class certification, they may be addressed in the first instance by the Court of Appeals on remand.
Friday, November 1, 2013
There is a lot of action on the civil procedure & federal courts front next week. Mark your calendars (especially if you’ll be in D.C.).
- Monday, November 4: SCOTUS oral argument in Walden v. Fiore (personal jurisdiction and venue)
- Tuesday, November 5: Senate Judiciary Committee Hearing, Changing the Rules: Will limiting the scope of civil discovery diminish accountability and leave Americans without access to justice? (witnesses: Arthur Miller, Andrew Pincus, Sherrilyn Ifill)
- Tuesday, November 5: SCOTUS announces one or more opinions in argued cases (could it be Daimler v. Bauman?)
- Tuesday, November 5: SCOTUS oral argument in Sprint v. Jacobs (Younger abstention)
- Wednesday, November 6: SCOTUS oral argument in Mississippi ex rel. Jim Hood v. AU Optronics Corp. (Class Action Fairness Act)
- Thursday, November 7: Public hearing on the proposed amendments to the Federal Rules of Civil Procedure
Friday, October 18, 2013
This week the Supreme Court heard oral argument in Daimler AG v. Bauman (covered earlier here and here). Daimler resembles last Term's Kiobel case, in that it involves claims against a foreign defendant (Daimler) for human rights and other violations committed abroad (in Argentina, during the "dirty war" of the 1970s and 1980s) under the Alien Tort Statute (ATS). But the question for which the Court granted certiorari in Daimler involves personal jurisdiction and is not limited to ATS cases: "whether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant in the forum State."
During the argument, plaintiffs' counsel acknowledged that their ATS claims faced an "uphill struggle" in light of Kiobel, but they are also pursuing state law and foreign law claims – for which personal jurisdiction would remain a live issue. Given the question presented, the more significant SCOTUS precursor may be the 2011 Goodyear decision, not Kiobel. Writing for a unanimous Court, Justice Ginsburg wrote in Goodyear that general jurisdiction over corporations is proper "when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." She cited (1) a corporation's principal place of business and (2) its state or country of incorporation as "paradigms" for general jurisdiction; but it remains unclear what else could render a corporation "essentially at home" in a particular forum. In particular, Goodyear acknowledged – but did not address – the argument that distinct corporate entities might be treated as a "single enterprise" for jurisdictional purposes. In Daimler, the Ninth Circuit found that California had general jurisdiction over Daimler based on the activities its American subsidiary, Mercedes Benz USA (MBUSA).
The most common reaction to this week's oral argument has been that the Justices were quite skeptical of the idea that Daimler was subject to general jurisdiction in California. That may be so, but several interesting issues came up during the argument, and there are still a number of different ways the Court could ultimately dispose of the case (some of them quite narrow).
Thursday, October 17, 2013
Lochlan Shelfer has posted on SSRN his note, Special Juries in the Supreme Court, 123 Yale L.J. 208 (2013). Here’s the abstract:
This Note presents the first detailed analysis of the Supreme Court’s only published jury trial, Georgia v. Brailsford (1794). It examines the case’s hitherto unstudied oral arguments and list of potential jurors, and argues that the "special jury" the Court employed was a Mansfieldian special jury of merchants. Brailsford has fascinated scholars both for the intriguing prospect of the Supreme Court presiding over a jury trial, and for the case’s provocative language on the power of juries to find the law. But for all of this interest, the case remains ill-understood. This Note’s conclusion that the Supreme Court used a special jury of merchants offers insights into both of these puzzles.
Tuesday, October 15, 2013
During last week’s oral argument in Madigan v. Levin (No. 12-872), the Justices revealed some concerns about whether that case was a suitable vehicle for deciding the issues for which the Supreme Court granted certiorari. One such concern—highlighted in a law professor amicus brief—was that the Seventh Circuit lacked appellate jurisdiction to decide the issue.
Today, the Supreme Court dismissed the writ of certiorari as improvidently granted. As is often the case, the Court issued only a one-sentence per curiam opinion: “The writ of certiorari is dismissed as improvidently granted.” (Well, it's two sentences if you count “It is so ordered.”)
Sunday, October 13, 2013
Lee Epstein (USC): “Claims about the Roberts court’s activism seem overwrought.”
Suzanna Sherry (Vanderbilt): "[T]he Supreme Court had erred more often in sustaining laws than in striking them down. 'Too much of a good thing can be bad,' she wrote, 'and democracy is no exception.'" Professor Sherry's article, entitled "Why We Need More Judicial Activism," is forthcoming in early 2014. Here's the abstract:
Too much of a good thing can be bad, and democracy is no exception. In the United States, the antidote to what the drafters of the Constitution called “the excess of democracy” is judicial review. Lately, however, judicial review has come under fire. Many on both sides of the political aisle accuse the Supreme Court of being overly activist and insufficiently deferential to the elected representatives of the people. I argue in this essay that criticizing the Court for its activism is exactly backwards: We need more judicial activism, not less. Courts engaging in judicial review are bound to err on one side or the other from time to time. It is much better for the health of our constitutional democracy if they err on the side of activism, striking down too many laws rather than too few. An examination of both constitutional theory and our own judicial history shows that too little activism produces worse consequences than does too much. If we cannot assure that the judges tread the perfect middle ground (and we cannot), it is better to have an overly aggressive judiciary than an overly restrained one.
Lee Epstein (USC) & Andrew Martin (Wash U): “In a nutshell, liberal justices tend to invalidate conservative laws and conservative justices, liberal laws.” Professors Epstein and Martin co-authored an article last year on the topic of judicial activism and the Roberts Court, entitled "Is the Roberts Court Especially Activist? A Study of Invalidating (and Upholding) Federal, State, and Local Laws."
Liptak's article also quotes a number of others, including several of the Justices themselves. The article is worth a read for those interested in the judicial activism debate.
Thursday, October 10, 2013
The Wall Street Journal LawBlog posted an interview with Justice Kennedy. Here's what Justice Kennedy said about how the court chooses cases:
Of the 9,000 [filed each year] we mark about 500 for discussion. From the 500 we discuss, we should take about 100, 120. Lately we’ve been taking only 80. There’s not a lot of emotional or intellectual capital expended arguing over whether we should take the case. If it’s a really important case and we feel badly that it wasn’t taken, there will be another one [sooner or later] on the same issue.
Wednesday, October 9, 2013
It’s a case that only a true civil procedure & federal courts junkie could love. But if you’re in that category, today’s oral argument transcript in Atlantic Marine Construction Co. v. U.S. District Court (covered earlier here) is a nice read.
The Justices seemed to be enjoying themselves as well – so much so that Jay Wexler (Boston University, and the Bill James/Billy Beane of SCOTUS laugh statistics) proclaimed “Holy Yuksville” after counting six laughter incidents. What topic could possibly inspire such levity? Here are the questions presented:
Following the Court’s decision in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), the majority of federal circuit courts hold that a valid forum-selection clause renders venue “improper” in a forum other than the one designated by contract. In those circuits, forum-selection clauses are routinely enforced through motions to dismiss or transfer venue under Fed. R. Civ. P. 12(b)(3) and 28 U.S.C. § 1406. The Third, Fifth, and Sixth Circuits, however, follow a contrary rule. This Petition presents the following issues for review:
1. Did the Court’s decision in Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988), change the standard for enforcement of clauses that designate an alternative federal forum, limiting review of such clauses to a discretionary, balancing-of-conveniences analysis under 28 U.S.C. § 1404(a)?
2. If so, how should district courts allocate the burdens of proof among parties seeking to enforce or to avoid a forum-selection clause?
P.S. Kudos to Stephen Sachs (Duke) whose amicus brief was mentioned frequently during the argument.
Monday, October 7, 2013
The Supreme Court kicked off this Term’s oral arguments today, only to have appellate jurisdiction crash the party. The Court had granted certiorari in Madigan v. Levin (No. 12-872) to decide a question about the interplay between claims for age discrimination under the ADEA and age discrimination claims brought directly under the Equal Protection Clause and § 1983. However, an amicus brief filed by law professors who (in the words of Lyle Denniston’s excellent argument recap) “specialize in the arcane field of court procedure” argued that the Seventh Circuit lacked appellate jurisdiction to decide that issue and, therefore, the Supreme Court should vacate the Seventh Circuit’s decision and return the case to the district court.
To give credit where credit is due, Prof. Steve Vladeck (American University) authored the amicus brief and did a terrific job. The issue attracted a lot of attention at oral argument (full transcript available here), as did a number of other issues that prompted some Justices to raise the possibility of dismissing the writ of certiorari as improvidently granted. Lyle’s recap concludes: “It would be no surprise,… based on Monday’s developments, that the Court would act quickly to get rid of the case, and leave the next stages to lower courts.”
Thursday, October 3, 2013
Tuesday, October 1, 2013
Today the Supreme Court came back from its summer recess and granted certiorari in eight cases. More information is available from Lyle Denniston at SCOTUSblog. Three of the cases raise interesting procedural issues specific to intellectual property claims:
Monday, September 16, 2013
Tuesday, August 27, 2013
Following its decision in Comcast v. Behrend, the Supreme Court remanded a number of class actions for reconsideration (two in April and one in June). Last month, the Sixth Circuit found that class certification remained proper in Glazer v. Whirlpool, a class action involving defective washing machines. The Seventh Circuit has now done the same in a similar washing machine class action against Sears. The entire opinion (Butler v. Sears) is worth a read; Judge Posner’s discussion of Comcast starts on page 5. Here are some excerpts:
Sunday, August 25, 2013
Adam Liptak has this story in today’s New York Times: Court Is ‘One of Most Activist,’ Ginsburg Says, Vowing to Stay
Tuesday, August 13, 2013
Here’s Adam Liptak’s latest story, When Lawyers Cut Their Clients Out of the Deal, which discusses a recent Ninth Circuit decision on cy pres settlements that is the subject of a pending Supreme Court cert. petition, Marek v. Lane (No. 13-136).
Friday, June 28, 2013
This week the Supreme Court issued its much-anticipated decisions in Windsor v. United States (on the federal Defense of Marriage Act) and Hollingsworth v. Perry (on California’s Prop. 8). Both cases presented significant questions with respect to Article III jurisdiction and standing, which were excellently summarized earlier this year by Marty Lederman’s seven-part series for SCOTUSblog.
In Windsor, a five-Justice majority opinion authored by Justice Kennedy (joined by Ginsburg, Breyer, Sotomayor, and Kagan) found that Article III jurisdiction was proper and that the Court should not invoke prudential grounds to refrain from exercising jurisdiction; the majority then concluded that DOMA was unconstitutional.
In Perry, a five-Justice majority opinion authored by Chief Justice Roberts concluded that the intervenors who supported Proposition 8 lacked Article III standing to challenge the district court’s order declaring Prop. 8 unconstitutional and enjoining California officials from enforcing it. Perry was a particularly interesting 5-4 split: The Chief was joined by Scalia, Ginsburg, Breyer, and Kagan. Justice Kennedy dissented, joined by Thomas, Alito, and Sotomayor.
From a jurisdictional standpoint, one crucial difference was that in Windsor, the federal government enforced DOMA (by denying Windsor the requested refund) and then proceeded to seek review of both the district court and appellate court rulings that DOMA was unconstitutional. As Kennedy puts it: “It would be a different case if the Executive had taken the further step of paying Windsor the refund to which she was entitled under the District Court’s ruling.” In Perry, on the other hand, the California government did not appeal the district court’s order and injunction. Perhaps the standing inquiry in Perry would have come out differently if the California government had adopted a litigation strategy similar to the one the U.S. government took in Windsor.
For anyone counting heads, here’s how each Justice came down on the Article III issues in both cases:
- Kennedy, Alito and Sotomayor supported exercising jurisdiction in both Windsor and Perry. (Alito is somewhat unique as to Windsor, because he argued that the U.S. government “clearly is not a proper petitioner” given its position that DOMA was unconstitutional; he argued instead that jurisdiction was proper because the House of Representatives’ Bipartisan Legal Advisory Group had standing as intervenors.)
- Roberts and Scalia opposed exercising jurisdiction in both Windsor and Perry.
- Ginsburg, Breyer and Kagan supported jurisdiction in Windsor and opposed jurisdiction in Perry.
- Thomas supported jurisdiction in Perry and opposed jurisdiction in Windsor.
Monday, June 24, 2013
With all of this week’s end-of-the-Term anticipation and excitement, some of today’s cert. grants may have slipped below the radar. But here are two cases that will be argued next Term that may be of interest:
Thursday, June 20, 2013
Today the Supreme Court issued its decision in American Express Co. v. Italian Colors Restaurant (No. 12-133), another important arbitration case. The Court divides 5-to-3, with Justice Scalia writing the majority opinion (joined by Roberts, Kennedy, Thomas and Alito), and Justice Thomas writing a brief concurring opinion. Justice Kagan writes a dissenting opinion (joined by Ginsburg and Breyer). Justice Sotomayor took no part.
Justice Scalia’s majority opinion begins: “We consider whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act when the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.” The answer: yes. The FAA’s mandate that arbitration provisions are “valid, irrevocable, and enforceable” applies [p.3], and “[n]o contrary congressional command requires us to reject the waiver of class arbitration here.” [p.4]. The opinion continues: “Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the antitrust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.” [p.4]